Building Blocks of a National Endowment

Nils Gilman, Yakov Feygin

Sovereign wealth funds have become widely-used tools to support the operations of governments as varied as Singapore, Canada, South Korea and Norway, as well as American states such as Alaska and Texas. A sovereign wealth fund is an institution that manages a National Endowment created by trade, natural resources, or government assets. The idea of a National Endowment is predicated on the principle that the government and its constituents are entitled to equity in the wealth that state institutions helped create. Moreover, the establishment of a National Endowment gives all citizens a chance to share in national wealth building, thus helping to overcome the growing division between haves and have-nots.

This white paper will examine ways of creating a National Endowment in the context of the United States economy. First, we catalog the assets available to establish a National Endowment and strategies to “acquire” them. Next, we examine a possible design of the institution that will manage these assets and the considerations that policymakers must keep in mind when legislating it into existence. Finally, we consider potential uses that proceeds from a National Endowment might be put to for the benefit of the public

While the United States provides some unique challenges for the establishment of government funds, we believe that the idea of a National Endowment is a useful way to rethink American fiscal policy. Instead of concentrating only on the liability, or debt, side of the balance sheet, policymakers should ask themselves more fundamental questions: what are the real assets of the American economy, and how they can be better put to work to provide broad benefits for everyone? We do not take a strong position on the optimal design of such a system, but instead, present a menu of choices and potential tradeoffs.

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